Business Leaders Demand WMATA Governance Reform

An alliance of Washington-region business groups is calling for a fix for the Washington Metropolitan Area Transit Authority (WMATA) that would create dedicated funding streams for the Metro rail system and a restructuring of the authority’s board.

Twenty-one chambers of commerce and employers groups outlined the proposal in a letter to the region’s political leaders, reports the Washington Post. The proposal is expected to have influence, the Post says, noting that executives with the signatory businesses are frequent campaign contributors.

WMATA has said it needs at least $500 million a year to restore to functioning condition the commuter rail transit system, which has been plagued by maintenance issues, safety incidents, and declining ridership. The letter signatories did not specify a particular funding mechanism.

“We’re not trying to get into the weeds,” said Bob Buchanan, founder of the 2030 Group, told the Post.

One commonly floated proposal is a region-wide, penny-per-dollar sales tax, but Northern Virginians have objected on the grounds that Northern Virginia would wind up paying more than Maryland and the District of Columbia combined.

Describing the Metro as in a state of “crisis,” the letter linked the creation of a dedicated revenue source toward a revision of the tri-state governing compact and a restructuring of the board. States the letter:

We reiterate our strong conviction that any reform effort must include reforms to WMATA’s governing, financial and operational structures. Reform of any one structure alone will not be sufficient. For instance, additional funding for Metro will only be beneficial if it is accompanied by structural changes that give WMATA’s board the flexibility to effectively allocate resources and staff the flexibility to leverage additional resources to make operational improvements.

Governance reforms include “right-sizing” the WMATA board and requiring directors to have expertise in specialized areas, including transit operations, management, finance and safety.

Bacon’s bottom line: WMATA is critical to the functioning of the Washington metropolitan region. After decades of short-changing maintenance, WMATA needs billions of dollars to remain a viable transportation mode. There is no avoiding the necessity for regional taxpayers to cough up more money to restore the rickety system to health. Washington-area residents have been enjoying the benefit of a heavy-rail transit system for years without paying its full cost — now it’s time to pony up. But given WMATA’s dismal history, the NoVa business leaders are absolutely right to demand reforms that will ensure that any new funds are not mis-spent or frittered away in concessions to WMATA labor unions.

Working out a compromise with Maryland and D.C. won’t be easy, but Virginia’s political leaders need to hang tough.

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11 responses to “Business Leaders Demand WMATA Governance Reform

  1. “One commonly floated proposal is a region-wide, penny-per-dollar sales tax, but Northern Virginians have objected on the grounds that Northern Virginia would wind up paying more than Maryland and the District of Columbia combined.”

    How typical, and what B/S.

    Northern Virginia needs this problem fixed far more than DC and Md. need it fixed. Northern Virginia through its own horrible and short sighted real estate development and road building habits is strangling itself. And now its only real and lasting fix is a revived metro that can thrive off of dense mixed use development in Northern Virginia.

    So let Northern strangle, hanging itself on its own bad habits, until it is willing to make the hard decisions necessary to stop abusing itself and everyone else in the region in order to make a few moguls and real estate developers rich at the expense of everyone else. Force them to sleep in the bed they built, until they reform themselves, and are willing paid the price to fix what they created and still want to abuse for the private advantage.

    • In fairness, I should point out that a recent poll showed that a slim majority of Northern Virginians actually do support a sales tax for metro. I should have been more precise in my word-smithing: “Many Northern Virginians have objected to the sales tax.”

  2. Owning land within walking distance of a Metro station creates vast opportunity for dense development that both increases the value of such land substantially and quickly and provide long-term economic value from sales and rental income. But for the extension and continued operation of Metro, the ability to develop at dense levels and achieve high levels of value and profits would not exist. For example, Fairfax County allows for much denser development near rail stations than in locations near other forms of transit. The County concluded rail can’t easily go away, whereas bus routes, etc. can. Sound logic to me.

    Both fundamental economics and principles of fairness suggest that a substantial portion of the costs for Metro be borne by those who benefit from Metro and their “customers” who rent or buy near the rail stations. Otherwise, density and the associated profits are a windfall to the landowners and to their customers.

    This logic strongly suggests new taxes be levied on the benefiting landowners and passed along, as permitted by the market, to their customers or absorbed in the form of lower profits. Taxes that would fit these criteria are a higher sales tax imposed only within TOD area, a broader sales tax that would apply to services by companies located in the TOD areas (such as accounting, legal services, consulting), and/or a higher real estate tax imposed only within the TOD areas.

    • “Both fundamental economics and principles of fairness suggest that a substantial portion of the costs for Metro be borne by those who benefit from Metro and their “customers” who rent or buy near the rail stations.”

      Substantial portion? Yes.
      All? No.

      The question is what percentage to each group.

      • Reasonable people can differ on where lines should be drawn, but the construction of the Silver Line occurred largely on the backs of Dulles Toll Road users, who have received no tangible benefits from the Silver Line, whereas landowners within a 1/4 mile of a rail station received the right to build to unlimited FAR subject only to a 400 foot height limit. It’s clear that plan was not fair and represented a huge transfer of wealth from ordinary people to well-connected landowners who also give big bucks to political candidates – chiefly incumbents.

        And even though there is less commercial space now than in June 2010 when the Tysons Comp Plan was approved, Tysons-related traffic, including cut-through traffic is much worse. While Tysons assessments are up, there has been no measurable impact on County revenues such that the real estate tax rate can be adjusted downward, at least in real terms. Arlington’s R-B corridor has provided real estate tax relief. Fairfax County staff has no idea if and when a similar result will occur in Tysons.

        Also, Tysons landowners are walking away from commitments made, including modifying their proffers. CapOne proffered a 30,000 square foot community center and now is proposing a huge auditorium that will be largely used by the Company with limited public access. It’s also proposing to reduce its commitment to park land.

    • A variation on the approach of a developer taxing district for public improvements was first tried in the very late 1980s and/or early 1990s for developments along Route 28 from Dulles south. It was considered very innovative at the time. I did not follow its successes or shortfalls. It would be interesting to hear from someone who has information on that subject.

    • TTM is talking about the concept of “value capture,” which is used in other metros around the world (including, most notably, Hong Kong). Absolutely, the landowners whose property values rise as a result of a Metro station nearby should cover some portion of the cost of building the Metro line.

  3. This is just another example of the broken Virginia Constitution and the stupidity of a strict implementation of Dillon’s Rule. The Metro has no direct impact whatsoever to any Virginians outside of NoVa. So why should the Imperial Clown Show in Richmond end up voting on what to do? Our simple-minded constitution tries to imagine a Virginia as it existed in Thomas Jefferson’s day – 95% of the people living a common rural lifestyle with 5% in small hamlets and villages. The reality of today is a much more diverse state with rural, suburban and urban areas. The portion of NoVa covered by Metro is a city whether the clowns in Richmond call it that or not. It needs to be governed like a city and, sadly for conservatives, taxed like a city.

    • Fairfax County supervisors debated whether to become a city since cities have more powers, including taxing authority, than do counties. The idea soon died because the City of Fairfax County would be responsible for local streets. From what I’ve observed over the years, parts of Fairfax County would like to break off from the County and become cities, chiefly to take over control of schools and zoning. The idea, not permitted by state law, still scares quite a few of the supervisors.

  4. I never heard about the 1-cent sales tax hike proposal, but keep in mind the State of Virginia already bumped up NoVA sales taxes instead of doing the “right” thing which would have been increasing gasoline taxes. So I think it is probably in NoVA’s best interest to go with fuel tax hike instead of keep jacking up sales tax, if GA would let us do it. Not clear to me why each jurisdiction VA/MD/DC must have equal 1-cent tax increases, unless that happens to mirror actual use. Go instead for the dollar amount and each state figures out best way to come up with it.

  5. WMATA also has a problem in it’s $2.8 billion unfunded pension and OPEBs liabilities. Employees get pensions based on overtime. Come talk to me about a tax increase when employee compensation is brought into line with the private and federal sectors.

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